Manufacturers expect an improved outlook this year which should lead to growth in exports and a turnaround in investment, although energy costs are a concern, according to a new report.

A survey of 200 senior executives by EEF, the manufacturers' organisation and Aldermore Bank found a more positive outlook than the muted picture of a year ago, with growth expected in all markets and across all sectors and sizes of companies.

Two fifths of companies said they plan to invest in the UK, with a further fifth saying their investment would be significant.

A third of large firms plan to invest overseas compared with a fifth of smaller companies.

Terry Scuoler, chief executive of the EEF, said: "Manufacturers are telling us they expect to make a greater contribution to growth, investment and jobs this year.

"Innovation, energy and diversifying into new supply chains remain key opportunities but the UK and the eurozone are also looking better.

"However, global uncertainty and rising energy costs pose significant risks and, the challenge for industry and government this year will be to get industry's investment plans over the line."